Product & Pricing Analysis
Who: B2B Distributor – Leading distributor of metalworking and maintenance, repair and operations (MRO) products and services with a 3,000 supplier network and 1.9M product offerings across North America.
Business Problem: Identify low-risk category/customer combinations where price increases could be implemented without customer churn.
Precision Action: Using our CHAID Statistical Classification Model, Precision identified attributes of loyal customers and identified the best customer targets for price increases. Using Precision’s Category Role model output, Precision analyzed the distributor’s sales, revenue, and margin data to benchmark against the rest of the industry. Categories were segmented and analyzed based on the buying behavior of existing customers and under-indexed category opportunities were identified as the Routine and Convenience categories. We then performed a pricing analysis to identify price increase opportunities for Routine and Convenience products. Lastly, we implemented a pricing test on $152MM sales of nonsensitive Convenience skus.
OPPORTUNITY/RESULTS:
- Implemented 4% incremental price increase to Convenience and Routine SKUs over mid-year base
- Experienced Zero customer churn as a result (verified using test v. control scorecarding)
- $8M actual incremental gross margin 3 months after implementation
Outcome:
$8M incremental gross margin
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